turnover on tax audit-treatment goods return

This query is : Resolved

Rave Erd (Querist)
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11 December 2010
Dear Friends,

A assessee done a sale turnover a financial year 2009-10 after deducting a Sales Return for Rs.35.42 lacs.

But the sales return goods, which was actually made a sales for FY 2008-09. The sales return for Rs.20.12 lacs.

In this situation, I sugessted that the sales return is to be treated a Purchase of goods and the Sales turnover FY to be increased, i.e. Rs. 55.54 lacs.

Hence, it is tax audit turnover.

It is correct or not ?

Ravi Shankar

Ravi Shankar (Expert)
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12 December 2010 I guess this is not correct. How could you treat 'sales returns' as purchases. If I can extend your interpretation, then sales could be treated as purchase returns and you will never have any turnover calling for a tax audit!

Anyway, the assessee need not have to apprehend any kind of penal action if he shows 'sales returns' and adjusts/reduces the same against the sales. However, the books of account must be clear about this adjustment and the assessee should be able to produce necessary documentary evidence to support his claim when asked for.

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sachin

sachin (Expert)
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13 December 2010 Agreed with expert

Preeti Agarwal

Preeti Agarwal (Expert)
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13 December 2010 No as per me treatment is not correct. Sales return in no case should be treated as purchases.
Further regarding tax audit since we look gross turnover for checking the limit and as ur assessee is in excess of limit of rs. 40 lacs he shall be liable for tax audit.

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Rave Erd

Rave Erd (Querist)
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17 December 2010 Sir, please clarify the both commends.

Ravi Shankar

Ravi Shankar (Expert)
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17 December 2010 Gross Turnover is the Gross Sales made by the assessee. Would the assessee pay tax on sales on the sales returns? Even your VAT returns would be showing sales figures after adjusting sales returns. I still stand by my opinion.

The term 'Gross' appearing before sales should not be mistook as 'total sales before sales returns'. It means the gross amount of the actual sales.

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